EU using loophole in sanctions to buy Russian oil, still largest importer: Think tank

European Union (EU) is still "indirectly" largest importer of Russian oil despite strict sanctions that were imposed by collective West in response to war in Ukraine. A loophole in G7 price cap has been enabling bloc to purchase oil and finance Russia's President Vlimir Putin's war machine, new findings published by Centre for Research on Energy and Clean Air (CREA), a nprofit think tank researching energy and air pollution, suggests.

European Union has been purchasing refined petroleum products from countries that are close allies of Russia, such as Turkey, and China, and se countries have subsequently boosted purchase of sanctioned Russian oil. Buying of petroleum products has ramped up "indirect" imports of Russian oil as countries have been purchasing higher volumes of oil products. Some have turned into biggest buyers of Russia’s crude, Finland-based think tank said. 

EUR 42 bn worth of oil products purchased from laundromat countries

Western countries largely banned imports of oil from Russia, but y purchased an estimated EUR 42 billion worth of oil products from countries that spiked Russian crude oil imports in 12 months. While objective of G7, Australia, and EU has been to dismantle revenues of Russia me from oil to cut funding into Ukraine conflict, fossil fuel exports, and imports of refined oil products have stepped up se oil sales.

re has been an increased laundering of Russian oil by countries importing Russian crude and n selling oil products to price-cap coalition countries, such as EU, CREA ted. A major loophole has been undermining impact of sanctions on Russia.

Credit: CREA.

According to CREA's statistics, price cap coalition countries boosted  imports of refined oil products from or countries like China (+3.6 million tonnes or +94%), India (+0.3 million tonnes or +2%), Turkey (+1.8 million tonnes or +43%), UAE (+2.6 million tonnes or +23%) and Singapore (+1.8 million tonnes or +33%). Price cap coalition countries' rampant import of refined oil products from mostly se five countries that are also allies of Russia has spiked by an estimated +10 million tonnes (+26%) or EUR 18.7 bln (+80% in value terms) in 2023, as compared with level that was imported  prior year. 

think tank listed that among price cap coalition that was involved in accelerating Russian oil sales, largest importer of oil products from laundromat countries was EU. imports by bloc from Russian ally nations amounted to EUR 17.7 bln. Australia purchased EUR 8.0 bln worth in 12-month period since Russia’s invasion. This was followed by  USA (EUR 6.6 bln), UK (EUR 5.0 bln) and Japan (EUR 4.8 bln). Meanwhile, since Russia's invasion of Ukraine and implementation of sanctions, China’s monthly exports of oil products to Europe and Australia increased far above historical levels in 2022.

China's oil product imports rise by 150%; hits 2.9 mn tonnes

China's oil product imports rose by a whopping 150% more than quarterly aver in 2022, hitting 2.9 million tonnes in fourth quarter. Since start of Russian invasion of Ukraine,  seaborne imports of Russian crude oil into its Asian allies China, India, Turkey, United Arab Emirates (UAE) and Singapore increased by 140% in volume terms, CREA's findings showed. Russia is able to find more buyers as it is offering discounted oil prices due to sanctions. According to Center of Research on Energy and Clean Air, India's port of Sikka became  biggest oil product export port to price cap coalition countries. It is also  largest importing port in world of seaborne crude oil from Russia since invasion. 

India, which has opted a neutral foreign policy and has been a key tring partner of Russia prior to invasion, has been staunchly vocal about its purchases of Russian crude oil even before  price cap was imposed by G-7. “Yes, because orwise, I’ll end up paying far more than what I can afford,” India's Finance Minister Nirmala Sitharaman h clarified in an interview in Washington. She was asked if India would continue importing Russian oil beyond $60-a-barrel price cap implemented as a response to invasion of Ukraine. “We have a large population and we also, refore, have to look at prices which are going to be affordable for us," India's Finance Minister, h said.